A California man who worked with bogus debt collectors in India agreed to settle Federal Trade Commission charges that he and his companies deceived and threatened consumers into paying debts that were not owed or that the defendants were not authorized to collect.

The settlement involving Villa Park, Calif.-based Varang K. Thaker, American Credit Crunchers LLC, and Ebeeze LLC bans the defendants from debt collection and prohibits them from misrepresenting:

    •    that they are affiliated with the government or a non-profit group,
    •    any terms or conditions for buying any good or service,
    •    any aspects of the good or service, and
    •    their refund policy.

The settlement includes a $5.4 million judgment, which is equivalent to the full amount of injury and the defendants will turn over nearly all of their assets, amounting to an estimated $170,000, which will be used for consumer refunds.

The monetary judgment will be partially suspended due to the defendants’ inability to pay, but if it is determined that the financial information they gave the FTC was untruthful, the remaining amount of the judgment will become due.

The FTC's February complaint alleged that the callers who worked with the defendants would contact consumers who previously had received or inquired about online payday loans.

Often pretending to be law enforcement or other government authorities, the callers would threaten to immediately arrest consumers if they did not agree to make a payment on a supposedly delinquent payday loan.

The FTC alleged that information submitted by consumers who had applied online for these loans found its way into the hands of the defendants, who used it to convince consumers that they owed them money.

Saying they represented the local police department, the “Federal Department of Crime and Prevention,” or simply a “federal investigator,” the callers allegedly typically demanded more than $300, and sometimes as much as $2,000. At other times, the callers claimed to be filing a large lawsuit against the consumer, or threatened to have the consumer fired from his or her job, according to the FTC.

But the consumers did not owe money to defendants – either the payday loan debts did not exist or the defendants had no authority to collect them because they were owed to someone else, the FTC alleged.

Consumers received millions of collection calls from India, and in a two-year period the operation took in more than $5 million from victims, according to the FTC. During that time, consumers filed more than 4,000 complaints with the FTC and state attorneys general about fraudulent debt collection calls.

The FTC charged the defendants with violating the FTC Act and the Fair Debt Collection Practices Act. According to the complaint, they:

    •    falsely told consumers they were delinquent on a loan, they must pay it, and the defendants had the authority to collect it.
    •    falsely claimed to be law enforcement authorities or attorneys.
    •    made false threats against consumers who refused to pay the alleged debts, including threats of arrest or imprisonment.
    •    harassed and threatened consumers so they often paid the alleged debts out of fear of being arrested or sued.

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry